Zuma looks to China to boost trade

South African President Jacob Zuma, struggling with sluggish growth and worker discontent at home, seeks to boost trade on Monday on a trip to China, the last of the four “Bric” economies he has visited in little over a year since taking office..

South Africa aims to tap trade and investment in “Bric” economies Brazil, Russia, India and China to make up for the downturn in traditional markets in weakly recovering Europe.

“There is a national consensus in South Africa that wants the country to be part of the Brics, and this visit to China is part of achieving that goal,” said Xu Weizhong, an Africa expert at the China Institute of Contemporary International Relations.

“South Africa also wants to be the bridge between Africa and China,” he added.

For Beijing, the visit by Zuma will be an opportunity to consolidate ties with African countries, where China is increasingly turning for resources, markets and diplomatic support.

Late last year, Chinese Premier Wen Jiabao offered Africa $10-billion in concessional loans over three years.

Yet with GDP growth forecast at 2,3% this year, South Africa stacks up unfavourably against China and India, and Zuma will be looking to narrow his country’s trade deficit with Beijing.

“South Africa wants Chinese investment, but at the same time is worried about the competition this will bring. South Africa is not well prepared for that,” said Xu, the Chinese expert.

Soul-searching
The African National Congress (ANC) is soul-searching over development policies, in particular how to boost the economy, which has failed to grow at the pace needed to dent chronic unemployment.

Many ANC officials are starting to see the fast growth of China and other Bric economies as proof that the state should be doing more to nurture growth—a departure from the free-market orthodoxy that has prevailed since the end of apartheid in 1994.

While Zuma is in Beijing, China and South Africa are expected to sign agreements that will include cooperation on mineral resources and transport, and to address lopsided bilateral trade flows.

China is South Africa’s largest trading partner, but last year South Africa ran a $2,7-billion trade deficit with China.

A Comprehensive Strategic Partnership Agreement that Zuma will sign is expected to address that, a South African government spokesman said.

“This agreement is expected to deal with the trade imbalance between the two countries and with the fact that South Africa still exports raw materials to China while importing finished products into our market,” the government spokesperson, Themba Maseko, said ahead of the visit.

Zuma will be shadowed by labour strains at home.

More than one million public sector workers in South Africa launched a strike last week, the latest in a wave of labour protests to hit the country since May and has involved teachers, police, health workers, customs officials and office staff.

A World Bank study published last week showed South African unit labour costs in 2008 were higher than any other mainstream emerging market apart from Morocco.
- Reuters